‘I-SAI’ is a dialogue series that invites healthcare professionals such as physicians, nurses, researchers with the latest knowledge and technologies, and professionals involved in healthcare policy. Through these conversations, the series explores each guest’s passion and the future they aspire to create. In this 25th installment, the focus is on health economics—the science of optimising the allocation of healthcare resources.
In many high-income countries, including Japan, health economics frameworks are used to determine insurance coverage and the allocation of healthcare resources. However, the underlying logic and decision-making structures are not necessarily well understood or widely shared within society.
For this series, we invited Dr. Jianchao Quan, a health economics specialist at the University of Hong Kong’s School of Public Health, and an adviser to the World Health Organization (WHO). Through this discussion, we seek to neutrally articulate the structure of healthcare as seen through the lens of health economics, explore why current systems have taken their present form and examine what is required for future transformation—offering insights into how healthcare decisions are made to maximise health outcomes with limited healthcare resources.
(From left) Kenta Kawaguchi, Dr. Jianchao Quan, Ayano Nakatani
Interviewees
Dr. Jianchao Quan
Clinical Assistant Professor specialising in health economics, health policy and healthcare management at the School of Public Health, the University of Hong Kong. After earning degrees in medicine and surgery at the University of Oxford, he completed clinical training in London. He subsequently obtained a Master of Public Health (MPH), a Master of Economics (MEcon) and a Doctor of Medicine (MD) at the University of Hong Kong. His research focuses on health policy, healthcare services and health economics, and he has published extensively in leading international journals such as Health Affairs, The Lancet Public Health and JAMA Health Forum.
Using economic models, he has evaluated public health policies related to diabetes, alcohol and tobacco control, and has provided research evidence to the Hong Kong Health Bureau and Department of Health. In addition to serving as a technical adviser to the WHO, he is also a member of government steering committees on healthcare financing. He is widely recognised for his practical research that bridges health economics and policy decision-making.
Ayano Nakatani
Master’s student in Public Health at the University of Hong Kong. Manager at PwC Consulting LLC. After building her career at the forefront of business consulting, she is currently pursuing her Master of Public Health (MPH) at the University of Hong Kong.
Kenta Kawaguchi
Senior Manager, PwC Consulting LLC
Section 1 — Passion
Pursuing a broader impact
Shifting from treating individual patients to improving population health
Kawaguchi:
Health economics frameworks, including health technology assessment (HTA), are said to underpin today’s insurance reimbursement systems and healthcare policies. To begin with, could you explain what health economics is?
Quan:
Health economics is the discipline that analyses how limited healthcare resources can be allocated in order to maximise population-level health outcomes and the quality of care. With ageing populations and the increasing prevalence of chronic diseases, the demand for healthcare continues to grow, driven by advancements in medical technologies. At the same time, resources such as funding and healthcare personnel are typically constrained. As a result, healthcare systems are forced to make difficult choices about what services to provide, to whom and at what cost.
In this context, health economics provides analytical frameworks and tools to support decision-making. Approaches using HTA and economic modelling systematically evaluate the clinical, economic and societal value (including cost) of pharmaceuticals, medical technologies and preventive interventions. Indicators such as the incremental cost-effectiveness ratio (ICER) and quality-adjusted life years (QALYs) are used to quantify the additional value of one option compared with alternatives.
What is important, however, is that these analyses do not determine what the ‘correct’ answer is.
Rather, health economics explicitly crystallise the impacts and trade-offs associated with each option and supports decision-making related to policy development, insurance reimbursement and clinical guidelines. Final decisions must take into account not only efficiency, but also equity, ethical considerations, social values and political judgement. The defining feature of health economics is this clear division of roles: economics provides the positive evidence for decision-making, whilst society itself makes the final decisions based on normative values.
Jianchao Quan, Clinical Assistant Professor, School of Public Health, University of Hong Kong
Kawaguchi:
I understand that you began your career as a physician. What led you to transition to the world of economics?
Quan:
When I was working as a physician in a hospital, I was able to provide care to individual patients and directly observe the effects of treatment. Over time, however, I increasingly felt that I wanted to be involved in initiatives that could have a broader impact on society as a whole, beyond one-on-one clinical care.
Rather than a single defining event prompting a change in direction, my interests gradually shifted towards improving healthcare within larger systems and structures. Health economics felt like a natural extension of that interest.
Kawaguchi:
You chose the path of health economics in pursuit of a broader impact. What passion has driven you along this path?
Quan:
What I find rewarding about health economics is the ability to objectively demonstrate the consequences of healthcare choices and contribute to better policy decisions.
Science has already shown us many ways to improve health outcomes—not only through medical technologies and treatments, but also through things such as community factors, lifestyle modification and public health interventions. The challenge lies in the implementation gap and where to prioritise investment within limited resources. This is where an economic perspective becomes indispensable. Factors such as where people live, their education, diet and physical activity, as well as external environments like air and water quality, all have a significant impact on health.
Addressing these structural factors can generate far broader benefits for society than treating individual patients alone. Even without relying on new drugs, health outcomes can be significantly improved through feasible policies such as smoking cessation initiatives and lifestyle interventions. Health economics helps to assess the value of such interventions and supports better decision-making.
Kawaguchi:
Compared with clinical medicine, where treatment effects are immediately visible, health economics often takes time before results become apparent. Is it difficult to stay motivated?
Quan:
It is true that the effects of policies and interventions are often not easily nor immediately visible. However, I see great value in the long-term process of continuously improving and evaluating systems. By clearly defining what should be evaluated and designing interventions that can withstand rigorous assessment, we can ultimately build better systems and policies.
The same applies to pharmaceuticals. Even after a new drug is launched, it is essential to continue careful evaluation of its real-world effects. Health economics also takes time, but its value is only proven once long-term outcomes are observed. The belief that progress will not occur unless someone takes on this role is a major source of motivation for me.
Section 2 — Transformation
Choosing the best option with limited resources
Health economics as a driver of social transformation
Nakatani:
Next, I would like to ask about the impact of health economics on society. After working as a consultant at PwC Consulting, I am now re-examining healthcare from a public health perspective. I often feel the difficulty of balancing operational efficiency with improvements in population health. How do you view the fundamental challenges facing current healthcare systems?
Ayano Nakatani, currently enrolled in the Master's program in Public Health at the University of Hong Kong
Quan:
Healthcare systems today face growing demand due to ageing populations, increasing chronic and comorbid conditions, and the emergence of new technologies. At the same time, financial resources and healthcare workforces are limited, making it increasingly difficult to sustain systems using traditional approaches alone. Improving individual services is not sufficient; we must also reconsider the decision-making processes embedded within institutions and policies themselves.
Nakatani:
In addressing these challenges, what role can health economics play?
Quan:
That is a very important question. As I mentioned earlier, health economics does not present a single solution. Rather, it provides a framework and tools to support better decision-making. Its role is to organise information so that, within limited resources, we can identify which options are most desirable for society.
One key concept is the analysis of opportunity costs—evaluating who or what is lost by choosing one option over another. Without this perspective, policy decisions risk becoming intuitive or ad hoc. However, translating analytical results into policy requires political will and social consensus. The degree to which HTA has been institutionalised and effectively implemented varies by country and region. While many parts of Asia are making progress in developing such frameworks, there are also regions, including Hong Kong, where institutionalisation remains limited.
Health economics is also not about presenting overly optimistic short-term projections. While costs are relatively easy to quantify, it is much more difficult to accurately measure the long-term qualitative value generated by healthcare and public health interventions. Even so, health economics plays an important role as a shared framework for continually considering what choices should be made to improve quality of life.
Nakatani:
As the demographic and social structures change, caregivers play an increasingly important role. How does health economics view caregivers?
Quan:
Although the time and burden borne by caregivers are of significant value to society, they are often not adequately recognised as an economic activity. Caregiving is often provided without compensation by families or non-profit organisations, so the costs can remain ‘invisible’ within existing systems. Therefore, health economics can provide frameworks for appropriately evaluating the caregiver burden and help strengthen health policy to support their burden.
The formal recognition of care as an economic activity and incorporating caregivers’ time and social value would contribute not only to GDP estimation but also to overall population well-being. This is particularly relevant in Japan, where the proportion and burden of family-provided care are high. From a health economics perspective, it should be possible to propose more effective support structures.
Kawaguchi:
What approaches are needed to communicate the importance of health economics to society at larger scale?
Quan:
Health economics is relevant to all of us, which makes education and awareness essential. That said, educating the public directly can be difficult and often becomes politicised. Moreover, health economics sometimes requires making decisions that may deprioritise certain areas.
Nakatani:
Resource allocation inevitably involves choices and prioritisation, which may result in some people not receiving services. What is important for gaining social acceptance in such cases?
Quan:
Rather than explaining on a case-by-case basis why services cannot be provided, it is more important to make the decision process transparent. Clarifying under what conditions services can be provided, and why they cannot be provided to everyone, helps build understanding and acceptance when the rules and procedures are open to scrutiny.
Nakatani:
Looking ahead, can health economics be used to improve citizens’ lifestyles and promote preventive medicine?
Quan:
Preventive medicine is an evolving field in Hong Kong and elsewhere. However, lifestyle changes and preventive interventions can be evaluated as public health programmes.
Many countries are already advancing such initiatives and learning from one another. What matters most is clearly defining what we aim to maximise—treating diseases, economic output or broader health indicators such as well-being and happiness. Health economics can help organise these value criteria and thereby provide a foundation for evaluating and implementing preventive medicine programmes.
Section 3 — Future
An era of collaboration across policy, industry and academia
The future shaped by health economics
Nakatani:
Finally, could you share your perspective on the future of health economics? Given the diverse stakeholders involved, how should the healthcare industry, governments and academia collaborate?
Quan:
From the perspective of influencing healthcare policy and resource allocation, the public sector plays an extremely important role. Countries such as UK, Australia and Singapore, have established dedicated health economics units—often functioning as chief economist offices—embedded within ministries of health. Evaluation methods and processes are gradually being standardised and accepted, while academia conducts research to advance the assessment of health and wellbeing.
Additionally, the healthcare industry must also collect and share long-term follow-up data to contribute to value-based decision-making. The value of healthcare is not determined solely by the clinical effectiveness of new drugs. Patient experience, social benefits, and ethical considerations all matter. Building the infrastructure to evaluate such diverse forms of value is a key area for collaboration among governments, industry and academia.
Kawaguchi:
You mentioned data preparation as a key role for the healthcare industry. How do you see data and artificial intelligence (AI) contributing in the future?
Kenta Kawaguchi, Senior Manager, PwC Consulting LLC
Quan:
With the widespread adoption of AI, value assessment will become increasingly sophisticated. In the past, evaluations relied on limited clinical data. By leveraging large-scale datasets and real-world data (RWD), it will be possible to make decisions that more closely reflect reality. However, more data is not inherently better. What matters is being able to clearly utilize high quality data to inform decision-making. While AI can support model development, the societal preferences and values ultimately determine decisions.
Nakatani:
What should we keep in mind when promoting the use of data?
Quan:
Healthcare data is fragmented across countries, institutions and insurers, making it difficult to conduct comprehensive evaluations using isolated datasets. Access restrictions and regulations also pose challenges, making consensus-building among stakeholders essential. Healthcare data is a valuable resource. To enable transparent evaluation, governments, healthcare institutions and companies must collaborate to build mechanisms for data linkage and sharing.
Kawaguchi:
Through this discussion, I have come to understand the importance of frameworks in health economics.
Quan:
Exactly. How we assess the best possible choices for patients within limited resources—and the frameworks used to make those judgements—will determine the future direction of healthcare.
Ideally, we would provide the best possible care without considering costs. In reality, however, financial and human resources are finite. How we evaluate areas that may be economically challenging but hold high social and ethical value—such as innovative treatments or enhancing the patient experience—will become increasingly important.
Kawaguchi:
In such a context, what do you expect from consultants?
Quan:
I expect consultants to help structure processes linking fragmented data, visualise information and make it understandable to a wide audience. In addition to traditional considerations such as safety, accessibility and regulation, many healthcare providers are increasingly interested in how value itself should be evaluated.
Health economics is not about reducing healthcare to cost-effectiveness alone. It is a discipline that considers how to holistically define value, incorporating societal preferences, ethics, patient perspectives and technological innovation. The mindset and frameworks required for this will shape the future of healthcare. I hope consultants will not only connect stakeholders, but also play a role in embedding health economics more deeply into society.
Kawaguchi:
Thank you very much for your time today.
Contact us
Related Content